Polaroid to lay off 2,000 employees

In
a press release today Polaroid Corp. announced a "major global restructuring
plan" which is designed to reduce debt. Approximately 2,000 jobs
out of a global workforce of 8,000 will be "phased out" over
the next one and a half years. This doesn't come as too much of a surprise
after the recent appointment of a new CFO and various press releases concerning
its troubled business.

CAMBRIDGE, MA  June 13, 2001  Polaroid Corporation (NYSE:
PRD) today announced a major global restructuring plan designed to reduce
debt and return the company to profitability. Approximately 2,000 positions,
or 25 percent of the global workforce of 8,000, will be phased out over
the next 18 months.

The restructuring program should realize total annual cost savings of
between $175 million and $200 million by the end of 2003, and the company
will take a series of restructuring charges in 2001 and 2002 to reduce
its cost base. These charges are expected to total between $150 million
and $175 million. In addition to significant reductions in personnel,
the restructuring will involve a reduction and reconfiguration of Polaroids
global operations.

"This is an extremely difficult decision, but an absolutely necessary
one if Polaroid is to compete in the digital future. We must focus on
our new Opal and Onyx instant digital printing technologies and manage
our core instant business to generate cash and reduce debt," said
Gary T. DiCamillo, chairman and chief executive officer.

This is the second restructuring announced by Polaroid this year and
will impact virtually all of the companys global operations, including
about 1,000 employees in the United States  most of them in Massachusetts.
In February, the company announced a restructuring to reduce its workforce
by approximately 950 jobs. That plan combined with the one announced today
will reduce the total number of Polaroid employees worldwide to approximately
5,500 by the end of 2002.

DiCamillo acknowledged that the Polaroid core instant business is experiencing
steeper declines than projected due to the soft economy and the competing
growth of digital imaging. He said the restructuring plan is consistent
with Polaroids new two-part business model to: (1) manage the companys
core instant products for cash and profitability; and (2) develop an instant
digital printing business with significant opportunity for double-digit
growth.

Polaroid introduced this new business model on May 31 at a meeting with
investors in New York, where Ian Shiers, executive vice president 
worldwide sales and marketing, previewed steps the company would take
to compete in the digital future.

"Our infrastructure clearly is too big, and the changes in our business
require a significant reduction of our cost base in line with our conservative
revenue expectations for the next two to three years," he said in
New York. Todays announcement supports that premise and puts Polaroid
in a solid position to meet the short-term financial targets that Shiers
outlined:

Gross margins in the low 40s as a percentage of sales

Overhead around 30 percent of sales

Double-digit operating margins

Improved cash flow through strong EBITDA and a focused reduction of
working capital and capital expenditures.

Second Quarter

Polaroid continues to focus on cash generation as its top 2001 priority.
Cash flow for the quarter is ahead of plan due to asset sales and reductions
in working capital and capital expenditures. Operating results for the
second quarter, however, are likely to be in the area of the operating
loss reported in the first quarter, excluding potential one-time charges
and real estate gains.

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